How digital innovations are making healthcare accessible to all

Thanks to digital innovation, multinationals in the healthcare industry are now able to reach out to the world’s 4 billion poorest citizens.

To follow in the footsteps of pioneers who are ahead in serving this largely untapped market, business leaders will have to discard the accepted concepts of marketing, distribution and finance and develop an empathetic understanding of the needs of disadvantaged communities.

Over 200 million people in India, many of them living in slums and rural areas, are in need of eye care. Although most of their afflictions could be easily treated, many lose their sight because they cannot afford healthcare.

The Indian clinic Aravind Eye Care found a way to address this problem. It is able to perform corrective surgery for as little as 50 US dollars per patient. Via high-speed wireless video-conferencing, doctors can consult with hundreds of rural patients per day. The clinic is one of the most successful examples of companies that develop products and services for the poor, with the help of new technologies.

A vast, untapped market

Inspired by the books of influential business strategists C.K. Prahalad and Stuart L. Hart, many multinationals are now trying to reach out to low-income groups. And not only out of a sense of social responsibility. People with an annual income of less than 1,500 US dollars represent a huge potential market: approximately 60% of the world’s population. Many live in emerging markets in Asia, Africa or South America.

People with an annual income of less than 1,500 US dollars represent a huge potential market: approximately 60% of the world’s population.

As Jeffrey Immelt, CEO of General Electric, puts it, “If we don´t come up with innovations in poor countries and take them global, new competitors in the developing world will.”

Seeking the golden formula

But it´s easier said than done. To reach the poorest citizens companies cannot solely rely on digital innovation. They completely need to reinvent their business model. Everything companies know about innovation, supply chain, finance and marketing strategy simply doesn´t work with consumers at the so-called ´bottom of the economic pyramid´ (BoP).

What´s more, moving into this market will have a huge impact on corporate HR policy and on what´s expected of their executives. It is a leap of faith, without any golden formula to apply.

Reinventing traditional business models

Here Aravind Eye Care can serve as anexemplar. The founder of the clinic, Indian ophthalmologist Dr Govindappa Venkataswamy, came up with a complete new approach to organising a healthcare clinic. Inspired by McDonald´s, he similarly organised the whole process into an assembly line, where an individual is trained to perform one particular task. It became such a success that today the clinic has franchises all over the world.

It´s no accident that it was a small organisation that devised such a revolutionary model, which is a typical example of ´disruptive innovation´ – a term coined by Harvard business professor Clayton Christensen.

According to Christensen, large corporations are by default less likely to be disruptive, for the simple reason that they want to avoid risk. The careers and rewards of executives depend on the revenue they make: why invest time and resources in a low margin or uncertain project if they can secure growth by servicing an already developed market?

Large corporations are by default less likely to be disruptive, for the simple reason that they want to avoid risk.

How to change the mindset of executives

It´s precisely this mindset that prevents many products and services for low income groups from getting off the starting-blocks, argued C.K. Prahalad in the Harvard Business Review: “The biggest change has to come in the attitudes and practices of executives. The traditional workforce is so rigidly conditioned to operate in higher margin markets that, without formal training, it is unlikely to see the vast potential of the BoP market.”

He stressed the importance of educating young managers by having them spend some formative years in BoP markets to observe the opportunities. Only if every leader in the business, from managers on the ground up to the CEO, is on board is there a chance of project success. This is because coordination between different company levels and departments becomes viable only if a new initiative aligns with the organisation’s value, processes and routines.

Unfortunately, many projects are executed by a single, albeit committed, group of individuals, in isolation from the rest of the organisation.

Unfortunately, many projects are executed by a single, albeit committed, group of individuals, in isolation from the rest of the organisation.

Using technology smartly

Unilever is one of the few large corporations that does take its mission in the BoP market seriously. Its Indian subsidiary, Hindustan Lever, has a programme for managers at all levels, including the CEO, to connect with impoverished customers, visiting outlets and talking to customers about their experience of Unilever products.

It was during those sessions that they discovered that marketing in a BoP market requires a fresh approach. To create a reliable infrastructure to distribute its goods to the consumer, Hindustan Lever uses wireless technology. Local entrepreneurs, usually women, are trained in basic IT skills and equipped with a smartphone. The phone is enabled with a mini enterprise resource package that helps them to run their business efficiently. On top of that, they receive basic courses in accounting, selling and health.

Marketing for the community

The marketing communications approach was also adjusted. Rather than targeting the message to the individual, as would normally happen, in poor areas the whole community must be addressed, because every penny spent unwisely by one person affects the extended family.

So when Hindustan Lever launched its Lifebuoy soap, it first had to convince its customers of the importance of good hygiene. It started educating children and their parents about the many diseases that can be avoided through regular handwashing.

Rethinking payment models

But even when a company like Hindustan Lever finds its way to the customer and local entrepreneurs, it faces another major challenge: the lack of financial infrastructure in poor areas. With no banking system, shop owners cannot obtain a loan to pay for large quantities of product upfront.

Microcredit has an important role to play here. It was the Grameen Bank that put this finance system for the poorest citizens on the map. Grameen is a Nobel Peace Prize-winning microfinance organisation and community development bank, founded in Bangladesh in the 1980s.

Today, microcredit is used by almost all companies operating in BoP markets. By providing local business owners not only with a loan, but also with basic training, Hindustan Lever takes the concept of microcredit one step further.

A rewarding journey

The road to success in BoP markets can be long and tortuous. However, the rewards are great. Doing business in rural areas and slums requires creativity, not least when it comes to reducing operational costs and finding better distribution systems. However, once in place, these new strategies can also be applied to other markets.

Doing business in rural areas and slums requires creativity. However, once in place, new strategies can also be applied to other markets.

The same goes for the product or service itself: once it’s successfully introduced for the lowest income groups in developing countries, it quickly moves its way up in the market.

In conclusion

In developed countries, there are huge groups of consumers living on a minimum income, looking for affordable products. With the help from digital innovation, this under-served market can be opened up.

Companies can apply the lessons already learnt by pioneers in BoP markets. However, success depends on a readiness to change the corporate mindset and a willingness to invest, before they can recoup the benefits. And that can take years.

Key take aways

• Many healthcare multinationals are trying to reach out to the poorest consumers, who represent a huge untapped market

• To reach the poorest citizens, company leaders need to reinvent their supply chain, finance, and innovation and marketing strategy

• To gain an understanding of low-income consumers, managers at all levels should spend formative time in disadvantaged communities